Here is a summary of the most interesting knowledge shared at the conference, Les Affaires – Adapt Your Marketing Strategy In Times Of Crisis held in Montreal on 12 March 2009.
Changes in Consumer Behavior Resulting From Economic Crisis
The US housing bubble of 2008, which propelled the current global financial crisis, is largely due to consumer behavior. Similar to the Great Depression of the 1930s where a run on banks perpetuated a downward financial spiral, it is consumer behavior again that is dictating the crisis of 2008.
Consumer behavior towards budgeting, debt and spending has changed in recent decades. Ever higher amounts of personal debt are more acceptable. According to Jacques Nantel, Professor Secretary General of Marketing at the University of Montreal, real household income has not increased in the last ten years. However, retail sales rose almost 180%, along with personal debt, from less than 50% of disposable income to more than 120%. It is this attitude towards personal debt that is accountable for the current economic situation, rather than the sub-prime mortgage market specifically.
As a consequence of the economic crisis, there are foreseeable adjustments consumers will make to their behavior. A reduction in credit is the foremost concern for consumers. Either their bank will press them to pay on loans, or consumers will voluntarily seek to reduce their credit card bills or consolidate all their debts into a lower interest loan.
That being said, consumers want to limit further debts and have developed distrust towards credit terms on sale items. Selling products with financing credit terms and various credit payment options are no longer the deal-closers they used to be. Instead, people are looking for quality and durability rather than the greatest quantity for the cheapest price. Consumers are rediscovering the virtues of a household budget and doing the math on saving for an item rather than paying for it on credit.
What this means for marketing
Just as the post-war generation’s spending habits were strongly shaped by war conditions, adjustments in consumer behavior are already taking place in those living through this crisis. Marketers require new strategies for success with these customers.
Firstly, marketing budgets are affected. Naturally, businesses are keen to cut costs and apply greater pressure on marketing teams for return on investment evidence. Strategic marketers with a strong brand name and lots of cash could use this time to fill in the recently vacated publicity landscape with their ads at discount media prices. However, launching a new brand might prove difficult, unless it’s a budget brand – and, as mentioned above, household budgeting is the new black.
This economic climate is the ideal time for marketers to explore online marketing, pay per click and social media avenues for advertising campaigns. Not only do you receive immediate and transparent results of return on investment, positive or negative, you also amass a wealth of demographic and geographic data to support future campaigns and your bid for a larger budget. It is the ability to target, in a very focused fashion, groups of consumers on the internet which promises to make internet marketing such a success. Additionally, email newsletters for retention campaigns can be specifically targeted towards your consumer demographics. Note here, it is imperative to avoid anything resembling spam, keeping in mind consumers’ heightened sense of distrust.
Consumers prefer to make purchases from someone they trust, who understands their individual needs. Online advertising allows you to focus on specific demographics and modify your advertising adcopy and images immediately to suit the times. Now is the perfect time to empathize with your consumer’s financial situation. Use the internet to market directly to your consumers and change your sales messaging to suit their new purchasing behaviors.
